Correlation Between Gamma Communications and Hershey
Can any of the company-specific risk be diversified away by investing in both Gamma Communications and Hershey at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Gamma Communications and Hershey into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gamma Communications PLC and Hershey Co, you can compare the effects of market volatilities on Gamma Communications and Hershey and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Gamma Communications with a short position of Hershey. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gamma Communications and Hershey.
Diversification Opportunities for Gamma Communications and Hershey
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Gamma and Hershey is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Gamma Communications PLC and Hershey Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hershey and Gamma Communications is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Gamma Communications PLC are associated (or correlated) with Hershey. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hershey has no effect on the direction of Gamma Communications i.e., Gamma Communications and Hershey go up and down completely randomly.
Pair Corralation between Gamma Communications and Hershey
Assuming the 90 days trading horizon Gamma Communications PLC is expected to under-perform the Hershey. In addition to that, Gamma Communications is 1.18 times more volatile than Hershey Co. It trades about -0.39 of its total potential returns per unit of risk. Hershey Co is currently generating about -0.43 per unit of volatility. If you would invest 16,765 in Hershey Co on November 7, 2024 and sell it today you would lose (2,254) from holding Hershey Co or give up 13.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Gamma Communications PLC vs. Hershey Co
Performance |
| Timeline |
| Gamma Communications PLC |
| Hershey |
Gamma Communications and Hershey Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gamma Communications and Hershey
The main advantage of trading using opposite Gamma Communications and Hershey positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gamma Communications position performs unexpectedly, Hershey can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Hershey will offset losses from the drop in Hershey's long position.| Gamma Communications vs. Adriatic Metals | Gamma Communications vs. McEwen Mining | Gamma Communications vs. Solstad Offshore ASA | Gamma Communications vs. Bank of Ireland |
| Hershey vs. Public Storage | Hershey vs. Telecom Italia SpA | Hershey vs. Spirent Communications plc | Hershey vs. Aeorema Communications Plc |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stocks Directory module to find actively traded stocks across global markets.
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